Original｜Odaily Planet Daily（@OdailyChina）
Author｜Wenser（@wenser 2010 ）
On November 4th, Beijing time, the U.S. midterm elections concluded. The Democratic Party swept both houses, regaining the majority of seats. This aligns with our previous prediction in the article “In the Last 36 Hours before the U.S. Midterms, a Golden Pit for U.S. Stocks and Bitcoin?”.
In the Senate, prior to the elections, the Republicans held a majority with 53 to 47. The Democrats needed to flip four seats, and ultimately, they staged six “red to blue” flips in one go: Texas, Kansas, South Carolina, Ohio, North Carolina, Iowa all turned Democratic; in the House, the Democrats captured 234 seats, significantly exceeding the 218-seat half requirement, marking a major victory.
Behind the Democrats' sweep in both houses, despite a two-month buffer period, the Trump administration is about to face difficult times, as the Democrats will launch attacks on the Republicans' “legacy issues.”
A Victory for the Democrats: Several Deep Red States Turned Blue
First, let's look at the House. Most of the seats flipped by the Democrats this time were in districts where Trump won in 2024: Three current Republican incumbents in Pennsylvania, Ryan Mackenzie, Rob Bresnahan, and Scott Perry all lost; Virginia's Jen Kiggans and Colorado's Gabe Evans also lost; as for the district in North Carolina where Trump won by over 9 points two years ago, it was finally captured by the Democratic farmer candidate Jamie Ager.
The Senate races were even more dramatic: South Carolina's Annie Andrews won a Senate seat for the Democrats after a 28-year gap; Texas had not seen a Democratic senator since 1988, but ultimately, Democrat James Talarico defeated Ken Paxton to capture this former “Republican territory.”
The subsequent races also followed the Democrats' script: according to NBC's projected results, Ohio's Sherrod Brown defeated incumbent Senator Jon Husted with 48.8% to 46.3%. Kansas's Adam Hamilton won 51.1% to Roger Marshall's 45.9%, and Iowa’s Josh Turek won 50.5% to Ashley Hinson's 46.4%. The last time Kansas elected a Democratic senator was several decades ago.
The Democrats also held their own, with Georgia's Ossoff and New Hampshire maintaining their positions. Michigan's El-Sayed is temporarily in the lead, with CBS still marking it as a toss-up, affecting only the size of the majority; at the gubernatorial level, Georgia's Keisha Lance Bottoms secured the first gubernatorial seat flipped of the night, becoming the first Black woman elected governor in the U.S. ABC predicts Ohio's Amy Acton defeated Vivek Ramaswamy; and Texas's Gina Hinojosa also won a governorship.
Why did the Republicans lose so badly? The polls have already explained the answer. Polling from multiple media outlets, including NBC, shows that Trump's support among voting voters was only 38%, down from 45% during his first midterm elections in 2018. 39% of voters listed the economy as the top issue, with 65% believing Trump's policies worsened the economy, and 62% feeling he was responsible for high prices. 43% said one reason for voting was to express opposition to Trump, which was even higher than in 2018.
Voters blamed oil prices, food prices, electricity costs, along with eight months of the Iran war and tariffs on allies, all on the White House and Trump.
The Most Expensive Bet in the Crypto Circle: $63 Million in Political Donations Went to Waste
For the crypto community, the most noteworthy event of the night was the election situation in Ohio.
Democrat Sherrod Brown, a former chair of the Senate Banking Committee, is recognized as one of the toughest opponents for the crypto industry. In 2024, Fairshake's Defend American Jobs spent over $40 million to unseat him for Republican Bernie Moreno. This time, Brown is vying for the seat left vacant by Vice President Vance.
According to media reports, Fairshake—a Super PAC that can spend unlimited funds on political advertising—spent over $50 million to oppose him in this election. Cointelegraph counted, along with the Digital Freedom Fund supported by the Gemini founders, the crypto industry spent about $63 million in total in Ohio.
Ultimately, Brown won, marking what might be the most expensive loss in crypto political donation history.
Compounding the problem, old friends of the crypto industry in Congress are leaving one by one: staunch crypto supporter Senator Cynthia Lummis did not seek re-election; with the Democrats gaining the majority in the House, House Financial Services Committee Chair French Hill may also be replaced.
For the crypto industry, there was some good news: Andy Barr secured a Senate seat in Kentucky, and the main proponent of the stablecoin bill, the GENIUS Act, Bill Hagerty, is also leading significantly in Tennessee, ensuring his re-election seems certain. Even so, the crypto industry is inevitably facing more scrutiny.
An Awkward Situation for the Crypto Industry and Trump
After the Democratic Party's sweep of both houses, the crypto industry and Trump are first in line to confront the CLARITY Act and Trump’s crypto income.
The former got stuck in Senate voting this year, missing by over 10 votes. At that time, the core demand from the Democrats was an ethical clause to restrict public officials from profiting from crypto businesses. Democratic negotiator Ruben Gallego stated before the vote that Republicans “care more about ensuring the president continues to profit than genuinely enacting regulations.” Senator Lummis also said on the day of the vote, that if the procedural vote failed, “that would be it.” The legislative push during this lame-duck period, leading up to January 3 when the new Congress members take office, seems unlikely to proceed.
Regarding Trump’s crypto income, last year's $1.4 billion figure has already crossed the Democrats' bottom line. Robert Garcia, who is poised to take over as chair of the House Oversight Committee in January, has already stated he will focus on investigating Trump family corruption, particularly involving their crypto businesses. Trump family projects, such as WLFI, may soon face a series of hearings.
Although the crypto industry was not a focal topic in this midterm election compared to issues like prices, the economy, and oil prices, the Democratic victory has indicated that crypto is no longer the industry it used to be in the social spotlight.
Of course, the SEC and CFTC will continue to advance crypto-friendly policies at their own pace, but the lack of support at the Congressional level will undoubtedly diminish their impact compared to before.
AI, U.S. Stocks, and Macro: Market Shifted from Decline to Rise Temporarily
Before the midterm election results were released, the U.S. stock market and crypto market were both on a downward trend, with BTC briefly dipping below $76,000; following the confirmation of the Democratic sweep, BTC rose to exceed $78,000; gold briefly surpassed $4,000. South Korea's KOSPI index shifted from decline to rise, erasing a previous drop of 4%; the AI sector also saw a turn from decline to a slight rebound.
Currently, following the Democrats gaining the majority in both houses, tightening data center development, as well as the likelihood of stricter regulations on AI and large tech companies, could soon become a reality, leading to continued pressure on the AI sector.
Over the next two years, U.S. politics will enter a phase of divided governance: both houses of Congress can issue subpoenas, hold hearings, and block budgets, with senators able to restrict presidential nominations; on the other side, the Democrats face challenges in advancing bills and policies, as Trump maintains veto power as president, and the numbers in the Democrats' hands do not reach the two-thirds needed to override a veto. Fewer new laws will pass, more investigations will occur, and old issues like the debt ceiling are likely to resurface.
It is no wonder Trump has stated in interviews: “Historically, you just need to exercise the veto for a few months in a row, and then they will come back saying, ‘We need to make a deal.’”
Conclusion: The Crypto President Remains, but the Crypto Congress is Gone
After the flipping of both houses, Trump’s nominations and appointments in the next two years will face stricter limitations. For the crypto industry, the lobbying targets will gradually shift from Trump and Republicans to those dominated by Democrats in Congress. The past two years of “the president staging TACO drama while the market fluctuated correspondingly” may be coming to an end.
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